[Congressional Record Volume 151, Number 130 (Friday, October 7, 2005)]
[Senate]
[Pages S11285-S11287]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATURAL GAS CRISIS
Mr. DOMENICI. Mr. President, this week, Senator Bingaman, Senator
Akaka and I returned from Baton Rogue.
We went down to see and learn firsthand about Hurricanes Katrina and
Rita damage to the energy infrastructure. There is a great deal of work
to be done, and there is a great deal of courage and confidence that it
can be done. We need to find ways to make that recovery go right.
Yesterday, my committee held a hearing where we heard from energy
industry witnesses who have been impacted by the hurricanes. The main
message of that hearing was we are in troubled energy times,
particularly on the natural gas front. The CEO of DOW Chemical Company
painted a very bleak picture for American industry.
Our industries that rely on natural gas both as a fuel and a
feedstock have hard choices before them about how and where they will
base their operations. In the U.S., natural gas prices are close to
$14. In China, it is less than $5. In Saudi Arabia, it is about $1. If
we translated gasoline prices to the level of increases faced by
natural gas--we would be seeing $7-a-gallon gasoline at the pump right
now.
At DOW's St. Charles petrochemical complex that I saw in Baton Rogue,
I learned that every $1 increase in the cost of natural gas means an
additional $35 million a year in fuel costs for that single facility.
Our manufacturers have to compete in global markets. At those prices,
they can't.
The energy bill we just passed took some good steps forward to
address these challenges but did not secure more natural gas supply
that we have available right here at home.
In the area on the Outer Continental Shelf known as the nonleased
portions of Lease Sale 181 which is not under moratorium, but which we
are not allowing leasing, there is approximately 7.2 trillion cubic
feet of gas. In the areas more than 100 miles from any state coastline,
2 resources are estimated to be approximately 6 trillion cubic feet of
gas.
This area can be leased administratively, without any legislative
action. At our committee hearing and during yesterday's press
conference I urged the administration to reconsider this policy in
light of our Nation's natural gas crisis, which has seen a 121-percent
price increase in just 1 year.
I will continue to work to cure more domestic energy supplies, but in
the short term all the witnesses the committee heard from yesterday
said conservation is the most effective tool we can use to deal with
the present crisis.
If every American turns down their thermostat just 2 degrees this
winter, it could free up 3 billion cubic feet of gas per day.
According to the DOW witness yesterday, that kind of conservation
would be equal to having 3 LNG terminals. In addition, we need to focus
our efforts on organizing the recovery on the energy infrastructure,
our witnesses all stressed the need to give priority to restoration of
natural gas processing plants.
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The Congress and the administration must provide the leadership to
make this recovery move quickly and smartly.
Our witnesses all emphasized that we are in an energy crisis.
Mr. President and fellow Senators, the country is facing an enormous
problem. I might even say, without reluctance, that it is a crisis.
People might say: Well, Senator, you are talking about Katrina, Rita.
No. Katrina and Rita have pointed out to us a crisis well beyond those
two hurricanes, and that is that we have a very significant shortfall
in the natural gas that is needed to run our businesses and to use for
our people during this ensuing winter. If something is not done, it
might be for a very long period of time.
Now, it sounds almost impossible, if not incredible, that I would be
here on the floor saying this when just 4 or 5 years ago, those who
were in the business of producing natural gas and those who knew about
America's energy situation were saying: There is plenty of natural gas.
Don't worry about that marvelous product.
So what we have done in the last 15 years is to say, since we don't
know how to clean up coal sufficient to meet our standards and because
we worry about global warming, we will not build any new coal-burning
powerplants.
We have not built a nuclear powerplant in over 20 years. So for the
last 15 years, at least 13 years, every new powerplant--that is these
big monster powerplants that generate electricity, 500 megawatts, 1,000
megawatts--is fueled by natural gas. Then the people of our country
have found this is a marvelous fuel for our kitchens, for houses, so
more and more people are using natural gas for our way of life, our
great standard of living. But what isn't understood is that natural gas
is such a great product that when you change its chemical makeup, you
use it for a lot of things. The entire fertilizer industry of America
is based upon natural gas as one of the components. People don't know
the entire chemical and plastic industry is built around and predicated
and dependent upon natural gas. That means not only is it imperative
that we have it, but I am here today to suggest it is also imperative
that it not be so high priced that it puts our businesses out of
business.
I had the luxury, as a Senator, to go down and see the aftermath of
Katrina and Rita with my colleagues Senator Bingaman and Senator Akaka
of Hawaii. We looked at the damage and the energy infrastructure of all
types that were destroyed or put out of business. They are going to
have an immediate impact because supply has been interrupted, both in
the generation of electricity and in putting natural gas into pipelines
to deliver it to the United States and to deliver it to our numerous
petrochemical plants, plastics plants, and other things. Also the
feedstock, you convert things from natural gas, you convert it into the
basic things that are used as feedstock for these industries. We are
going to be in short supply in the short term because supply has been
interrupted and the capacity to deliver has been interrupted. Those are
going to get fixed in due course, but in the meantime, we have
dramatically used down our reserves, because they are there to pick up
when we don't have natural supply coming. The offshore wells aren't
producing, so you have reserves to take their place. But the reserves
are being depleted, so we are going to have much less reserve capacity
which means we may have interim difficulties.
But what has happened is, all of this has pushed the price of natural
gas up. Believe it or not, at the beginning of this week, the bid price
was $14, where just a few years ago it was $2, and 10 days ago it was
$7. Understand that it doesn't sound like much if you are talking about
2 cents or 7 cents. There isn't much difference between that 14 cents.
That is just a little change.
Here is the problem: We had a hearing in the Energy and Natural
Resources Committee. I must say, as chairman of that committee, it
lasted 2\1/2\ hours. It was probably as informative a hearing as I have
ever presided over. Eight Senators participated. They stayed there and
listened to five people talk about the crisis America has with
reference to natural gas, not only because of the aftermath of Katrina
and Rita, but because we are using so much natural gas and we don't
have enough production to meet the need.
We can't sit around and listen to people who say: We don't need any
more supply. That is these old industry companies that want to scare
us, and they don't need more supply.
We need more supply. It is imperative that we find more natural gas
some way. I will quickly tell you the little bit we can do in that
regard. I will acknowledge this hearing was attended by witnesses
representing the entire industry of oil and gas, a leading
environmentalist, three other people who know the problems of Katrina
very well, and they were in harmony that we must conserve. So I don't
want anybody to think conservation isn't a very important part of this
problem I am telling you about, this pending crisis of the rising cost
of natural gas and the shortages that might occur. Every chance I get
and by every means available, I am going to try to remind the Senate
and anybody who will listen that we must understand this fantastic
commodity called natural gas is not abundant in the United States. The
price is going to go through the roof if something isn't done.
I don't have an answer right now. I am working at it, but I don't
have an answer. I want everybody to know, so they are not surprised,
that we understand anything that can be done should be done because the
crisis is imminent. If the price stays at $14, the crisis is imminent.
Let me tell you how important it is. One of the largest employers in
America of high-paying, skilled, professionally trained jobs is the
petrochemical industry, the chemical industry, Dow Chemical, a huge
plant down there in the middle of Katrina. We went to see it. I won't
talk today about the heroics of trying to bring it back and save it and
save their people. That is another story. But yesterday the president
and chief operating officer of that great company came to our
committee. He is reported in the morning's Washington Post in the
business section with a detailed story about this crisis I am talking
about. This gentleman, Andrew Liveris, is a terrific executive. He gave
us a very simple example which I want everybody to listen to. At this
plant are 3,500 professionally trained, skilled Americans with terrific
jobs. How good? The average is $70,000 plus great benefits for each and
every person there. They produce huge things. They gave us a little box
of them. They produce all kinds of plastics, things you could never
imagine that they produce and sell. The principal ingredient in making
their product is natural gas.
Without natural gas, all those workers can go home. They can go home
and say goodbye because they can't operate, not only without natural
gas, but if natural gas gets too high, petrochemical plants can be
located anywhere. They are not inherent to a piece of geography in the
United States. They are being sought after by everyone in the world.
That CEO told us on the record: When I leave you, tomorrow I am going
to China. You can't tell him: Don't go to China. China wants to build a
petrochemical industry. They think the greatest in the world is this
one. Do you think he is going over there to have a birthday party? He
is going over there to talk business.
This is not a question of cheap labor. It is a question of natural
gas prices. You understand, there may be natural gas in China for $1.
He is now going to have to pay, if this price stays where it was bid
Monday, $14. Do you think he will stay here? He can't stay here, not
only because he wants to go somewhere, he will go out of business here.
These are the numbers. Already 100,000 American jobs are gone, because
100,000 jobs were for their export business. They can't export because
they are totally out of competition. The price is too high because of
natural gas. So that part of American employment is gone. But now there
are almost 800,000 additional Americans. How many jobs can we lose and
say it doesn't matter?
It was suggested by this gentleman, who had a terrific analytical
ability--he told us how all this works--if the price of natural gas
continues as we are talking about, 800,000-plus jobs will go. They will
not be able to stay open.
Add to that the fact that everybody must understand you don't see
natural gas on a gasoline pump. You don't see day by day the price
going up. When
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you see gasoline go from $2 to $2.50, $2.80, $3, you say: Something is
going wrong. The increase in natural gas price from where it was a year
ago to where it was Monday of this week, if you transfer that into
gasoline prices, gasoline would be priced at $7 a gallon. Think of what
would happen to the American economy and to everyday people if gasoline
were $7. Everybody who uses natural gas, in particular the industries
that use it, are suffering from that kind of an increase. Two years ago
gasoline was at $1.69. What if it went to 7? That is what has happened
to natural gas.
I am going to include in the Record a statement that gives further
details about this problem. But I suggest that we must come to grips
with the conservation. We are going to put some ideas together.
Let me say, if the American people this winter were to reduce their
thermostats by 2 degrees, do you think it would be hard on everybody? I
mean just imagine, unless somebody is sick and the doctor prescribes
it, it would be an enormous savings of natural gas for the United
States and for this pipeline to deliver natural gas. Do you know the
pipelines that come out of Louisiana down there in that gulf, these two
giant pipelines go all the way from Louisiana up into the United
States, with legs off in Ohio, all the way to New York, delivering
natural gas from that area so loaded with hydrocarbons? They put them
in these pipes and have generating pusher stations all the way up into
America and deliver it.
If we conserve the way I have described and other ways, which we are
coming to grips with, it will make a big impact on how much those
pipelines have to deliver to meet the demand. We have to find a way to
do the best we can by American industry or they are going to close. And
while we have some natural gas to heat our houses, we will be without
jobs for the people who live in those houses.
The one thing they all suggested, when they were sitting around that
table talking to us, was: There is one major source of natural gas that
is American that we ought to get. I must say to those States who are
coastal States, they must understand they are Americans first and
coastal States second. The largest supply of American natural gas is
off the coasts of our country. No doubt about it. The United States
cannot sit by with the technology we have developed--we can go way
offshore so that you cannot even see them. So those States that are
worried about their visibility, if they are worried about oil spills,
there are no oil spills from those platforms that drill.
Do you know that during the time we had this crisis not one major
oilspill occurred. Those giant platforms with 20 wells drilled
underground, with drilling that goes parallel and with one that was
turned upside down, the oil did not come out. So nobody has to worry
about that. We can handle that. That is where the natural gas is.
I close by saying that we have been told by the experts that the best
way to reduce this crisis would be to have an immediate supply of
natural gas. That is not possible. We are going to have to open a
substantial number of liquefied natural gas platforms or ports around
our country. And where they are being delayed, we have tried to solve
that in our Energy bill. We are going to push those local governments
to quit the delay for delay sake and get on with letting us put some of
those in so natural gas can come from foreign countries, which I hate
to say, but at least we can look at it and expect it.
In the meantime, it is said that if we were to say to those who pay
for natural gas that we are opening parts of the Outer Continental
Shelf, just the section 181 off the coast of Florida and Alabama, which
I say now to the President of the United States, Mr. President, you
ought to sit down and figure out a way through your Executive order,
through your pen, to open section 181, or portions of it, off the coast
of Alabama and Florida. Do it, Mr. President. It might take a couple
years to produce. It is ready, so it will be very quick.
We are told that the mere fact that the market understands that is
ready, that huge entrance of natural gas into the areas for delivery,
the pipeline system, that it will reduce the pressure on the cost of
natural gas. I think the occupant of the Chair can understand that. The
marketplace will say: Oh, it is not going to continue in this crisis
state because here comes this huge natural gas that is now released and
is ready to come. We must do that. Until it is done, at least this
Senator--I have to worry about my State, but I am also a Senator for
America, and I am not going to let up until that is done.
Secondly, the States in this country that refuse to recognize that we
can drill off their shores on land that is owned by the Federal
Government--it is not their land; they only have a few miles, and then
it belongs to Americans--you can drill way out there, do no harm, and
bring gas into this country to get us through the next 10 or 12 years
while other sources of energy that are clean, such as nuclear and very
clean coal, come on to keep America alive.
The next thing we are going to do is to find out how we can pass
legislation to get those other coastal States in the position where
they are either willing to accommodate this in exchange for us giving
them substantially more royalties, or we are just going to have to bite
the bullet.
It is going to come down here, and the people are going to have to
say no, or filibuster, but they are going to have to know what they are
doing. They are adding to the crisis status of our country and job
market and to one of the few major industries that is left in this
country that we are great at. We are not going to be there very long.
China is going to catch up, and then it is not going to be cheap labor.
It is going to be high technology and national gas. India is doing the
same.
I was at an event last night. We used to say how powerful we were. We
know where it is; it is in India. Reliance Energy has the largest
refinery of crude oil to refine into gasoline-related products. We sit
here thinking we are the leaders of the world in everything. We have
been sitting somewhere for a long time. I hate to say on what. But we
surely have not been doing anything. If anything, we have been going
backwards. There have been no new refineries in the United States for
more than two decades. That is almost incredible.
I thank the Senate for listening. I will say again, this is probably
the most significant event confronting us. I regret to say there are no
easy answers. If there were, we would have done it, but we finally have
come to the understanding that it is major, it is big, it is serious.
Mr. President, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
Mr. DODD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DODD. Mr. President, what is the business before the Senate?
The PRESIDING OFFICER. The Senate is in morning business.
Mr. DODD. I thank the Chair.
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